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    Phoniex University
    Oct-2001 - Nov-2016

Category > Accounting Posted 26 Sep 2017 My Price 7.00

Wall Inc

Wall Inc. uses the allowance method to estimate uncollectible accounts receivable.Thecompany produced the following aging of the accounts receivable at year-end.

 

Number of Days Outstanding

Accounts receivable

Total

0–30

31–60

61–90

91–120

Over 120

% uncollectible

375,000

220,000

90,000

40,000

10,000

$15,000

Estimated bad debts

  

1%

4%

6%

8%

10%

Instructions

(a) Calculate the total estimated bad debts based on the above information.

(b) Prepare the year-end adjusting journal entry to record the bad debts using the aged uncollectible accounts receivable determined in (a). Assume the current balance in Allowance for Doubtful Accounts is a $8,000 debit.

(c) Of the above accounts, $5,000 is determined to be specifically uncollectible. Prepare the journal entry to write off the uncollectible account.

(d) The company collects $5,000 subsequently on a specific account that had previously been determinedto be uncollectible in (c). Prepare the journal entry(ies) necessary to restore the accountand record the cash collection.

(e) Comment on how your answers to (a)–(d) would change if Wall Inc. used 3% of totalaccounts

receivable, rather than aging the accounts receivable.What are the advantages to the companyof aging the accounts receivable rather than applying a percentage to total accounts receivable?

Answers

Maurice Tutor
(5)
Status NEW Posted 26 Sep 2017 07:09 PM My Price 7.00

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